LONDON (ICIS)--European polystyrene (PS) prices in February are likely to settle in line with the February styrene monomer barge contract increase of €17/tonne, well below the increase that some PS producers had initially sought.
At the start of the month, PS producers sought price hikes of up to €40/tonne but recent weakness in the feedstock styrene monomer spot price scuppered their plans for margin improvement and forced them to re-evaluate their targeted prices for February.
The styrene spot market lengthened this week, resulting in falling price ideas and, up until yesterday, offers were down $35/tonne. February styrene bids and offers opened the week at $1,590-1,615/tonne on a free on board (FOB) basis, but have gradually eased lower amid losses in Asia and sluggish downstream demand in Europe, sources had said.
A PS producer said it expects to close its February orders, on average, at an increase of €15-20/tonne from January, having already settled about 40% of its business for the month at an average increase of €20/tonne.
It indicated that the planned price hikes had been pared back in the face of lower than expected demand in February, likely due to the recent weakness in styrene monomer spot prices.
“I believe many of our customers are watching the development of styrene monomer carefully. It is calming demand down, the price has fallen a lot in recent days.”
Furthermore, the producer indicated that the recent weakness in styrene monomer is likely to result in lower PS prices in March. Nevertheless, it still plans to try and grow margins next month.
A distributor said demand so far in February has been extremely soft, adding that the range of prices it has heard in the market is very wide. Nevertheless, it said PS prices are currently too high and consumers are now more readily examining product substitution, particularly polypropylene and polyethylene terephthalate (PET).
A buyer, however, was slightly more bullish on February demand levels, saying it has not been too bad so far. Nevertheless, it said PS prices are too high and volatile raw material costs are impacting demand. As such, it said it is looking further afield than its traditional suppliers, to try to secure a more competitive price.